Background

• $235 million privately held, manufacturer of legacy and LED lighting products had grown rapidly (200% YoY Revenue growth) from a small company to be a significant manufacturer within the industry

• Whilst the Company was marginally profitable at the EBITDA-level, total debt had grown substantially commensurate with working capital assets causing the Company to default on its bank agreement

• As a result, the Company was tasked to reduce inventory (prior to CM&A involvement, ~1 year of inventory on-hand) and subsequently debt with the aim to refinance its debt obligations

CM&A Role / Turnaround Process

• Immediately instituted an ‘open-to-buy ‘strategy to reduce inventory days on-hand while proactively monitoring all daily inventory activity

• Introduced a sophisticated inventory demand planning process designed to anticipate ‘problem areas

• Developed a cost reduction program to reduce Company expense by $7 million, which was driven by: (i) SKU rationalization to eliminate roughly 35% of product and reduce complexity, (ii) evaluation and renegotiation of freight / logistics agreements to yield $2.5 million in savings

• Advised ownership on sales territory growth strategies and sales channel / target account strategies

• Led Senior Lender communications to keep the financial institution abreast to the turnaround process

Outcome

• $15 million inventory reduction within 5-months

• $7 million incremental EBITDA

•  ~$50 million increase in equity value as a result of inventory reduction / working capital improvement efforts and additional EBITDA realized

• Debt reduction to support a successful refinancing within 9-months of CM&A involvement